How the Housing Market Could have been Helped

The housing market is in terrible shape, Foreclosure Signs are now a popular yard decoration in most of America's front yards.
With the loss of jobs and bad banking we knew this was coming. My idea is not a perfect answer but it would have kept many people from running from their homes they loved.
First of all Banks could have worked with many people. This all started with those that signed up with that funky rate thing, where their payments where set for so much then BOOM balloon payment. Many Americans could have kept making their original payment amount even with bring home less money. The banks were not willing to work with these people, they must have not looked around and seen what was happening, decline of jobs, which was holding hands with the decline of home sales. But as we all know Banks are blind to the real world until they have no money coming in because they have thousands of empty homes with no buyers.
Many of these banks could have changed the way we see them. Instead of forcing a family out and losing big time they could have worked with the home owner. Accepted their original payment amount and extended their home loan, Based their payment on their income. Just until this storm blows over. Any amount of money is better than no money at all.
This would have also lowered with amount of money these banks had to borrow from the government.
I'm not blaming the banks solely here, America is full of people who live way beyond their means, A lot of people could still be in their homes had they changed the way they live. Less going out, wearing last summers clothes, less trips to Disneyland and so on.
Not all these families are homeless they just moved from a 1500 dollar a month home payment to a 1200 dollar apartment payment, with a difference of 300 dollars I think that the banks should have really looked into salvaging some of these home loans. Its never to late to do so. I'm sure many people would gladly move back to their dream homes if banks would offer such a deal like this.
We are suppose to take care of each other kicking families out of their homes is not the answer, working with them to keep them in the home is.

What is News Today.... lets start with AIG

AIG and their big bailout bonus. I might not be the smartest person you will ever meet, but I have to admit I do have more common sense than those at AIG.
Did they really think that the government would not find out about the bonus bull crap they gave out? Come on...really?
Another thing that really has me scratching my head is, why they felt these people deserved a bonus in the first place. IN MY WORLD.. a bonus is given to those that have earned it, and that have accomplished something great for their company. This must not be how it works for AIG.... apparently you get a big ass bonus if you fail, suck a company dry and have to beg the government for money in order to keep the company afloat and pay these guys too.
I believe I heard on CNN that one of the AIG guys said they had to pay these bonus out so they didn't lose any of these people..... omg I want to be an executive at AIG, not only do I have to suck at my job but I get a big fat bonus to boot and they don't want to lose me to another company.
Do they really think someone would want to hire one of these money leeches that actually broke one company, and quit AIG because they didn't get their undeserved borrowed from big brother bonus.
If any of you AIG guys read these why don't you use your common sense and think things through and let these people go. Maybe hire some real people, instead of over educated dumb asses that have destroyed your company and now took all your respect you have worked very hard to get.
You really have put yourselves in a bad place. Good Luck on getting anymore help from the American People.